Senator Shannon Grove (R-Bakersfield) responds to today’s announcement by the United States Department of Justice that three inmates have been charged in a prison-based COVID-19 unemployment benefits scheme.
The US Attorney’s Office released information regarding the indictment against three defendants who submitted $1.4 million in fraudulent unemployment insurance (UI) claims in other inmates’ identities to the California Employment Development Department (EDD).
“The EDD’s tolerance of unemployment insurance fraud is a scandal of historic proportions. The Department failed to check UI claims against current inmate roles which essentially gave criminals an easy outlet to steal billions of dollars from taxpayers,” said Senator Grove. “We need to put safeguards in place immediately, and my bill SB 39 will mandate that the EDD crossmatch all incoming claims against current inmate roles.”
In the past year, audits have uncovered billions of dollars in misspent UI benefits at the EDD due to the department’s inability to prevent fraud. Between March and August 2020, more than 35,000 Pandemic Unemployment Assistance claims were filed on behalf of inmates and more than half of those claims were paid, despite inmates being ineligible to receive the benefits under current law.
“Over 30 billion taxpayer dollars have essentially been thrown out of the window due to the Governor’s failure to address EDD fraud,” said Senator Grove. “With those funds we could have paid back the $24 billion our state borrowed from the Federal Government to pay unemployment insurance claims for needy families. Now the cost will be paid for by businesses, many of whom have just barely survived the government’s Covid shutdown.”
Vulnerabilities in the EDD system were identified in March 2019, yet California was 1 of only 15 states that failed to cross match unemployment benefit claims with jail and prison rolls. The lack of preventative fraud measures has opened the door for criminals to steal billions of taxpayer funds.